In our industry, niche retailers are almost 10 times larger than the Internet; they have keyed into the hard surface sales bonanza and what many refer to as the Costco effect. It almost doubled in size from 2002 to 2007 and has a market share of about 14 percent.

The Real Story
It has been conventional wisdom that a retail flooring store carries all types of flooring. Flooring is a specialty product so why would anyone just carry a narrow part of a specialty category? Why would anyone offer flooring products and not offer installation which is between 25 percent and 65 percent of total installed price? She doesn't want just one product for her home so why not offer all products to complete the home?

Niche retailing or narrowcasting was in response to big box retailers in all consumer products categories. For an Office Max, there was a store that just sells ink for printers, etc. or just batteries (auto and home) or just water (totally crazy) or just wood (Lumber Liquidators — the 100 year warranty wonders).

If all I do is sell wood, I claim victory in the knowledge war. Obviously, I know more about wood than the store with everything. That's her perception. And I will have more and at lower prices. That's her perception, too.

2. Fiction: There are fewer and fewer contractors and they control labor and nothing else. They are comprised of builder and commercial contractors and the rest are just a bunch of trowel and bucket guys.

Fact: According to Census of Construction, there was an increase in the number of flooring contractors and ceramic tile contractors:

2002

2007

Flooring Contractors

12,865

14,595

Ceramic Tile Contractors

8,950

11,824

Real Story: These numbers are for contractors with at least one employee and owner. In each category, there are probably 30 percent more contractors with no employees (just one person).

For carpet and vinyl, many of these contractors are aligned closely with one retailer; just enough distance between contractor and retailer to make them non-employees.

But that is not so for wood, laminate and ceramic tile contractors. Many are on their own and they control almost $5 billion in product sales; yes product sales, not labor.

Where do they go to get the product which they then sell to the consumer? Home Depot and Lowe's; niche or narrowcasting retailers (see above); ceramic tile and wood distributors with excellent show rooms and Pro Source type businesses.

Should you be a supplier for these contractors? Not hard and it could be very profitable.